This roadmap, if followed, promises a pathway not just out of economic crisis but towards a future of resilience and prosperity for all Sri Lankans.
As Sri Lanka approaches the pivotal Presidential elections on 21 September 2024, a new book, Sri Lanka: From Debt Default to Transformative Growth, offers a strategic vision for the country’s economic future. Released on 22 August by the London-based ODI global affairs think tank, the book proposes a comprehensive framework to move Sri Lanka beyond stabilisation towards lasting, sustainable economic progress.
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| Young girl in the window of her father's Tuk-tuk (traditional taxi) in Jaffna, Sri Lanka. [ Photo: Natalia Davidovich /World Bank] |
The collection of essays, written by leading Sri Lankan and international experts, provides 27 actionable policy proposals aimed at steering the country from the debt crisis that culminated in the 2022 sovereign default to a trajectory of inclusive and equitable growth. The timing of the book’s launch, just a month before the elections, underscores the critical importance of the coming political decisions in shaping the nation’s future.
Economic Crisis and Recovery
In 2022, Sri Lanka experienced an unprecedented economic collapse, marked by severe inflation, food shortages, and a sovereign debt default. While recent measures have stabilised the economy and eased some of the immediate hardships, the contributors to Sri Lanka: From Debt Default to Transformative Growth argue that these efforts must evolve into a long-term strategy that transcends mere recovery. Dr. Ganeshan Wignaraja, Visiting Senior Fellow at ODI and co-editor of the book, highlighted this in his remarks during the launch:
“This is not the time for complacency. Sri Lanka has made impressive strides in stabilising its economy in the wake of the 2022 debt default and economic crisis. However, the country now faces the critical challenge of shifting its economic trajectory from one of debt distress to sustainable, equitable growth.”
Wignaraja stressed that the proposals in the book go beyond fixing the past to focus on building a future where all Sri Lankans can thrive. He described the book as a “call to action” for the nation’s political leaders and its citizens alike.
A Multi-Pronged Approach to Transformation
The essays in the book advocate for a holistic and multi-pronged approach to economic transformation. Among the key proposals are:
- Building Cross-Party Consensus: The book stresses the importance of achieving political consensus on economic direction, essential for policy consistency and building investor confidence.
- Debt Sustainability: Proactive debt management, including restructuring both domestic and external debt, is proposed to ensure long-term sustainability.
- Strengthening the Central Bank: Reinforcing the independence of the Central Bank is seen as crucial to effective monetary policy and financial stability.
- Fiscal Discipline: Transparent budgeting and better tax administration, alongside strict spending controls, are recommended for fiscal sustainability.
- Business and Trade Reform: Streamlining regulations and integrating Sri Lanka into global supply chains and trade deals are proposed to drive growth through investment and trade expansion.
- Inclusive Growth: Targeted social protection measures, including food security initiatives and safety nets for the most vulnerable, are recommended to ensure the benefits of growth are widely shared.
The overarching message of the book is that Sri Lanka’s economic challenges can only be met through a combination of political will, policy innovation, and the collective effort of all stakeholders. Professor Dirk Willem te Velde, Director of the International Economic Development Group at ODI and co-editor of the book, echoed this sentiment:
“The upcoming elections present a crucial opportunity for Sri Lanka to choose a path of sustainable and inclusive economic transformation, and the path forward is clear.”
Timing and Political Context
The timing of the book’s launch is significant. With Sri Lanka at a critical juncture politically, the book provides an informed backdrop for the election debate on economic policy. It aims to foster dialogue among policymakers, experts, and the public on how best to steer the country away from the destructive cycles of debt and towards lasting prosperity.
The upcoming Presidential election will determine not only the next political leader of the country but also the direction of its economic policy for years to come. The book urges that the next administration embrace the proposals put forth to ensure long-term prosperity, fiscal discipline, and inclusive growth.
A Resource for Policymakers
Designed as a practical guide, Sri Lanka: From Debt Default to Transformative Growth is expected to serve as a key resource for Sri Lankan policymakers, as well as for international partners, as the country navigates its economic recovery. The authors hope that the insights and proposals offered in the book will help to create a future where Sri Lanka is not only financially stable but also economically vibrant and inclusive.
Printed copies of the book will be available in bookstores across Colombo from the end of September, while the digital version can be downloaded from the ODI website.
This roadmap, if followed, promises a pathway not just out of economic crisis but towards a future of resilience and prosperity for all Sri Lankans.
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